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The plan document, when and where it is required, is like your calling card; it will get you in the door where you’ll have to convince investors and loan officers that you can put your plan into action.
Everybody running a business wants a business plan to help focus strategy, manage milestones, manage metrics, assign and track responsibilities and performance, and manage money using projections for sales, costs, expenses, and cash.
This doesn’t require the big formal business plan document (complete with complicated business plan components) you fear like a term paper. It probably lives on your computer until you have to share it with somebody outside the team.
"We've grown the business from a $62,000 investment to the No.
2 energy drink in bars and nightclubs," Hackney says.
Writing the plan, Hackney says, was "absolutely" worthwhile. "Going into the study, I was very skeptical about the value of business plans," Gartner says.
"I had a lot of stuff in my head that needed [to be] put on paper."Clemson University entrepreneurship professor William B. And the SBA notes on its website: "The importance of a comprehensive, thoughtful business plan cannot be over-emphasized." But lately, questions have arisen. In other words, Bygrave and his team found that entrepreneurs who began with formal plans had no greater success than those who started without them. But after he and his colleagues looked at data from the Panal Study of Entrepreneurial Dynamics, a national generalizable survey of more than 800 people in the process of starting businesses, he found that writing a plan greatly increased the chances that a person would actually go into business.Starting a business was the last thing on Sean Hackney's mind when he sat down to write a business plan.Hoping to persuade a soft drink company to hire him, Hackney scripted a plan for taking on his former employer, Red Bull North America Inc.Let’s move from there to the formal business plan document, which is something some businesses will sometimes need. It also contains specific business plan elements, and is dressed up and made presentable for the occasion.It’s a bit like dressing a teenager for the class prom.If you are writing a plan for your colleagues and partners to expand an existing business, then the focus of that plan may be more operational than financial.If you are writing a plan for a bank, the most important aspect to the bank manager will be your financials. Will the cash flow be enough that you can make the monthly payments for the loan you have requested?In 2006, William Bygrave, a professor emeritus at Babson College and longtime entrepreneurship researcher, studied several years' worth of Babson graduates to find out how much better those who started businesses with a formal, written plan did than those who didn't. "You're two and a half times more likely to get into business," he points out."That's powerful."Gartner's earlier concerns about the necessity of business plans, he says, were that they were "all talk.If you are approaching a banker for a loan for a startup business, your loan officer may suggest a Small Business Administration (SBA) loan, which will require specific business plan sections.If you have an existing business and are approaching a bank for capital to expand the business, they often will not require a business plan, but they may look more favorably on your application if you have one.